Gift Tax Calculator

Written by Krislyn ChanKrislyn ChanKrislyn is Chief Growth Officer at Keeper. At Keeper, she strives to make expert-level tax strategies that used to require a traditional CPA accessible to all. Prior to Keeper, she was at Curology, where she helped bring custom, prescription-grade skincare out of the dermatologist's office to millions of faces.

Peer reviewed by a tax professionalReviewed bya tax professionalThis content has been reviewed by an Enrolled Agent (EA) with the IRS — the highest credential awarded by the agency. Enrolled Agents are empowered to represent all taxpayers before the IRS, on all types of tax-related matters. Accountants who earn this certification have passed a comprehensive three-part exam on individual and business tax returns. To maintain EA status, they must stay up to date in the field by completing 72 hours of continuing education every three years.

Do you have to pay taxes on money that has been gifted to you?

Chances are you’re here because someone handed you a big check, or you’re thinking about helping a family member out, and now you’re wondering whether the IRS is going to want a piece of it. The good news: for most people, gift tax is a non-issue. But the rules are worth understanding, because there are some smart planning moves that most people never take advantage of.

The short answer: in both 2025 and 2026, you can give up to $19,000 per person per year without filing any paperwork or owing any gift tax. Married couples can combine their exclusions and give $38,000 per recipient. If you give more than $19,000 to any one person, you’ll need to file IRS Form 709 — but you almost certainly won’t owe any actual tax, because the lifetime exemption is $13.99 million (2025) or $15 million (2026). Gift tax is paid by the giver, never the recipient.

What exactly is the gift tax?

The gift tax is a federal tax on transfers of money, property, or other assets where you don’t receive fair market value in return. If you sell your car to your son for $1 when it’s worth $15,000, the IRS considers the $14,999 difference a taxable gift, even though no cash changed hands as a “gift.”

The tax was designed to prevent wealthy individuals from dodging estate taxes by simply giving everything away before they die. In practice, the vast majority of Americans will never owe a dollar of gift tax in their lifetime, but understanding the rules can save you from unnecessary paperwork and unlock real planning opportunities.

Gift taxes are paid by the giver, but you might owe taxes later

If you receive a large gift, you don’t report it as income and you don’t owe tax on it. However, assets like stocks or real estate can trigger taxes when you eventually sell them. Say you were gifted stock that you later sell at a profit — you’ll owe capital gains tax on that gain, using the original donor’s cost basis.

In plain English, the IRS calculates your profit based on what the original owner paid for it, not what it was worth when you received it. Let’s say your uncle bought stock for $5,000 years ago and gives it to you when it’s worth $20,000. You later sell it for $22,000. The IRS sees your taxable gain as $17,000 — the difference between the $5,000 your uncle originally paid and the $22,000 you sold it for. It’s worth keeping track of what the original owner paid whenever you receive an asset as a gift.

How the annual gift tax exclusion works

Every year, the IRS lets you give up to a set amount — the annual exclusion — to as many individuals as you want, with zero tax consequences and no paperwork required. For both 2025 and 2026, that amount is $19,000 per recipient.

That means if you’re feeling generous, you can give $19,000 to your daughter, $19,000 to your son, $19,000 to your best friend, and $19,000 to your neighbor in the same year, and none of it triggers any reporting requirement. The limit isn’t on how many gifts you give — it’s on how much you give to each person.

Gift splitting for married couples

If you’re married, you and your spouse can combine your annual exclusions through a strategy called gift splitting. This lets a married couple give up to $38,000 per recipient per year without any gift tax consequences.

But if you choose to split gifts, both spouses must file Form 709, even if only one spouse actually wrote the check. Gift splitting is powerful for high-net-worth families trying to reduce a taxable estate. A married couple with three married children could gift $38,000 to each child and each child’s spouse — moving $228,000 out of their estate in a single year, completely tax-free. Do this every year over a decade and you’ve transferred over $2 million out of a taxable estate.

The lifetime gift tax exemption

Even when you give more than $19,000 to a single person in one year, you almost certainly won’t owe any tax. That’s because of the lifetime gift and estate tax exemption — a cumulative limit that shields enormous amounts of wealth from gift or estate tax over the course of your life.

• For 2025, the lifetime exemption is $13.99 million per individual.
• For 2026, it rises to $15 million — thanks to the One Big Beautiful Bill Act (OBBBA), which made the higher exemption permanent and indexed it for inflation starting in 2027.

The lifetime gift exemption and the estate tax exemption come from the same pool. If you use $2 million of your lifetime gift exemption during your life, your estate exemption at death is reduced by $2 million — which makes tracking your cumulative taxable gifts on Form 709 critical for large estates.

Gift tax example

Here’s how the annual exclusion and lifetime exemption play out in a real scenario:

• You give your adult child $50,000.
• The first $19,000 is covered by the annual exclusion — no reporting or tax.
• The remaining $31,000 exceeds the annual exclusion, so you must file Form 709.
• That $31,000 is subtracted from your $15 million lifetime exemption, leaving $14,969,000 of remaining exemption.
• You owe $0 in gift tax, unless your total lifetime gifts ever push past $15 million.

Gift tax rates

For the rare situations where someone exhausts their lifetime exemption, the gift tax uses a progressive bracket system similar to income tax brackets. Rates range from 18% to 40%, applied only to amounts above the lifetime limit. Like income tax brackets, these rates are marginal — each rate applies only to the portion of the gift that falls within that bracket.

How to calculate your gift tax step by step

Whether you’re doing a quick mental calculation or preparing to file Form 709, here’s the process a CPA would use:

Step 1: Determine the fair market value of the gift

Cash is straightforward. For property, stocks, or real estate, use the fair market value on the date of the gift.

Step 2: Subtract the annual exclusion

Reduce the gift value by $19,000 (2025–2026) per recipient. If married and gift splitting, reduce it by $38,000. What remains is your “taxable gift” for this recipient.

Step 3: Check your remaining lifetime exemption

Add the taxable gift to your cumulative prior taxable gifts. If the total is still below the lifetime exemption, you owe no gift tax — but you must file Form 709 to report it.

Step 4: Work with a pro if you’ve exceeded the lifetime limit

This is very rare, but if you’ve exhausted your exemption, it’s best to engage a CPA or estate attorney to help you navigate the strategic planning moves available to you.

Non-taxable gifts

Beyond the annual exclusion, several categories of gifts are completely exempt from gift tax:

• Tuition payments made directly to an educational institution
• Medical expenses paid directly to a provider
• Gifts to a U.S. citizen spouse (non-citizen spouses have a special annual limit of $190,000 in 2025 or $194,000 in 2026)
• Gifts to political organizations

The IRS also allows a special election called five-year gift tax averaging (or “superfunding”) for 529 college savings plans. You can contribute up to $95,000 to a 529 plan in a single year (5 × $19,000) and elect to treat it as five years’ worth of annual exclusions — no gift tax, no lifetime exemption reduction, and five years of tax-free compounding from day one. A married couple can superfund $190,000 in one year per beneficiary.

Form 709: when you have to file and what happens if you don’t

You must file IRS Form 709 by April 15 of the year following any year in which you gave more than $19,000 to any single person, even if you owe no gift tax. You also must file if you’re using gift splitting with your spouse.

Filing Form 709 isn’t the same as owing gift tax. The IRS uses it as documentation to track your lifetime exemption usage. If you skip it, the IRS can assess penalties for failure to file, even when no tax was owed — and if you never file for a gift, the IRS technically has an unlimited window to audit it.

State gift taxes

Most people assume the federal rules cover everything, but Connecticut is the only state with its own standalone gift tax, at a flat 12% rate. Connecticut’s tax only kicks in after you’ve exhausted your federal lifetime exemption, so for most residents the state gift tax is also irrelevant. All other states follow the federal rules or have no separate gift tax.